So now we have the recipe and an example for "Dead Men Walking":
* Common stock too low to issue new shares.
* Preferred stock yield too high to issue new shares economically.
* Issuing debt is uneconomic.
* More write-offs coming in days to come.
* Business trends are awful.
* Denial.
Now that we have identified the "poster child", let's find a few more... Or sadly, more than a few.
Zions Bancorp
* Equity has traded down from $75 to $25.
* Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
* Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13 14%.
* They are geographically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
* They say they need $200-300 million capital. Good luck.
* They maintained their common dividend.
KeyCorp
* Common Stock has traded down from $40 to $11.
* Preferred Stock trades at 13%.
* Debt trades in the market at 10-11% dividend.
* Cut dividend in half in July, still yields 6.5% even while they lose money.
Fifth Third Bank
* Equity has traded down from $60 to $14.
* There are no preferred issues outstanding.
* Debt trades in 10-11% range if you can sell it.
* Cut dividend by 75%.
Washington Mutual
* Equity has traded from $40 to $3.
* No preferred outstanding except convertible preferred.
* Debt trades in the 20-25% range.
* Cut the dividend to $0.01 per share in April.
* Has admitted they will lose money for the next several years.
National City
* Equity has traded from $40 to $5.
* Preferred stock trades at 13-15%.
* Sold a huge amount of shares at $5 per share in April.
* Cut dividend to $0.01 per share in April.
Regions Financial
* Equity down from $40 to $8.
* Preferred Stock Trading at 10%.
* Debt trades in the 10-11% range, if you can sell it.
* Cut dividend by 75% in June.
* Needs to raise $2 billion, according to Sanford Bernstein.
General Motor/GMAC
* Equity has traded from $80 to $10.
* Preferred stock trades in 18% area.
* Short-term debt trades in 25-30% range.
* Long-term debt trades in 17% range.
* Eliminated common dividend in July.
Ford/Ford Motor Credit Co
* Equity has traded from $60 to $4.
* Preferred stock trades in 16-17% range.
* Long term debt trades in the 18-20% range.
* Eliminated common dividend in September.
Wachovia
* Equity has traded from $60 to $14.
* Issued a $3.5 billion "hybrid security" in February that now trades at 11%.
* S&P has stated they cannot issue any more hybrids.
* Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
* Cut common dividend twice since February to $.05 a share or 90%.
* Debt trades at 9.5-10.5%.
CitiGroup
* Equity has traded from 60 to 9.
* Preferred Stock trades in 12% range.
* Outstanding debt trades in 12-14% range.
* Cut common dividend by 66%.
* Sold 91,000,000 shares of common at $11 in April 2008.
Who are in the "Limping but Not Dead Man Walking Crowd"?
These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include:
* Citi
* Merrill Lynch
* Morgan Stanley
* Suntrust
* Legg Mason
* Capital One
* AIG
* MetLife
* Prudential
www.safehaven.com/article-11073.htm
Wer nur zurueckschaut, kann nicht sehen, was auf ihn zukommt.
Konfuzius
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